Wednesday, May 4, 2011

TANZANIA'S LOCAL AUTHORITIES IN FINANCIAL SCANDAL

Tanzania local government authorities are facing tighter scrutiny after an audit revealed financial chaos in their record-keeping.

The audit suggests that there is a high probability that some council employees have stolen money from the local government authorities. The audit slams the councils for laxity in accounting principles and record keeping.

Ludovick Utouh, Controller and Auditor General, told The EastAfrican that the councils do not have the capacity to manage the finances at the lower administrative levels hence an increased risk of mismanagement after transfer of funds to councils under the decentralisation by devolution arrangement.

During the 2009/2010 financial year, 34 out of the 134 audited councils had effected payments amounting to $1 million where supporting payment vouchers were not available for audit purposes.

The council with the highest unsupported payment figures was Kishapu District Council, with $1.2 million, followed by Ruangwa District Council with $273 million.

According to Mr Utouh, these problems are compounded by the increase in non-compliance with the existing internal control systems.

"The performance on financial reporting for the year 2009/2010 has declined as compared with the year 2008/09, while the number of councils has increased from 133 in the last year to 134 in 2009/10, all of which were audited," his report said.

The number of Unqualified Opinions has decreased from 77 in 2008/2009 to 65 during 2009/2010. The number of Qualified Opinions has increased from 55 to 65, while the number of Adverse Opinions has also increased from one to four.

Councils with Adverse Opinions for this year are Mwanga District Council, Kishapu District Council, Rombo District Council and Kilwa District Council.

Lindi District Council faces scrutiny after its Development Grant amounting to $1.26 million was wrongly presented as a recurrent grant in the financial statements. The Auditor General's report said that other aspects that contributed to a decline in performance included lack of close supervision, poor management of implementation of development projects at wards and villages level. Councils, it is reported, transfer funds to wards and villages and do not make follow-ups.

Some councils did not prepare statements of capital expenditure and financing for the year ended June 30, 2010.

"In the absence of the statement of capital expenditure and its financing, I was unable to ascertain the source of funds, name of projects, budgeted funds, balance from the previous years, actual revenue received, total funds available, actual expenditure and unapplied capital," said Mr Utouh.

The government through the National Audit Office engaged KPMG Tanzania to conduct an integrated financial management system audit between August 2009 and June, 2010. This review raised weaknesses including under utilisation of IFMS, lack of refresher and user training.

In 71 councils payments totaling $3.65 million were made without proper supporting documents while 55 councils had unnclaimed salaries of $1.1 million not remitted to the treasury.

Audit of payroll and related documents revealed that payments worth $192million was made to various financial institutions by the councils as payments for loans taken by former council employees not guaranteed by the council.

However, a scrutiny of the documents revealed that persons for whom loans were being repaid were no longer in the government service and therefore not entitled to any salary payments.

In Dodoma Municipal Council, out of 198 employees, 23 per cent were not paid at all. "I am concerned about this uncontrolled borrowing arrangement which may adversely affect employees' and ultimately the council's performance because of its de-motivating effects," he said.

This is against a government directive issued in March, 2009 which prohibits deductions beyond one third of a civil servants' monthly salary.